In 1995, S's share of the corporation's ordinary loss is $4,500, and S's share of the disallowed portion of entertainment expenses (an NDNC expense) is $1,500.
1367-1 (e) is to postpone the deduction of otherwise deductible expenses in situations in which the sum of NDNC and deductible expenses exceeds the shareholder's basis.
basis is reduced first by deductible expenses and then by NDNC expenses).
S then reduces basis to zero with $500 of the NDNC expenses.
Under the general ordering rule, the deductible expenses would be carried forward if the shareholder's basis were insufficient to allow reduction of the full amount of deductible and NDNC expenses.
The general ordering rule is beneficial when NDNC expenses exceed the shareholder's basis.
Under the general ordering rule, S would reduce basis to zero using $500 of the NDNC expenses.
In addition, S would carry forward to 1996 the $1,500 of NDNC expenses not used to reduce basis in 1995.
General Elective rule rule Basis, 1/1/96 $ -- $ -- Ordinary income 6,000 6,000 Ordinary loss carryforward (4,500) (4,000) NDNC expense carryforward -- (1,500)
I get such calls despite having registered my number with NDNC," said Ajay Prakash, a Delhi- based exporter.
Sanjay Kapoor, CEO ( India and South Asia), Bharti Airtel, said, " As service providers, all responsible telecom companies are keen that the existing process of NDNC be successfully implemented.